NEWS
	Federal Communications Commission 445 12th Street, S.W. Washington, D.C. 20554	News media information 202 / 418-0500 Fax-On-Demand 202 / 418-2830 Internet: http://www.fcc.gov TTY: 202/418-2555
	This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
	FOR IMMEDIATE RELEASE: April 13, 2000 NEWS MEDIA CONTACT: Mike Balmoris at (202) 418-0253 Email: mbalmori@fcc.gov
	FEDERAL COMMUNICATIONS COMMISSION TAKES FURTHER STEPS TO TAKE PROFIT OUT OF THE ILLEGAL PRACTICE OF TELEPHONE "SLAMMING"
	Washington, D.C. - Today, the Federal Communications Commission (FCC) adopted tougher rules to combat the illegal practice of slamming. Slamming, the single largest source of complaints to the Commission over the last several years, is the unauthorized change of a consumer's preferred telephone company. The Commission decided that state regulatory commissions are better equipped than the industry to resolve slamming disputes and directed that those disputes be brought before state commissions, or the FCC in cases where a state has not elected to administer these rules. The rules adopted today also require slamming carriers to pay out 150% of all payments received from consumers. In this order, the Commission accepts the proposal of state regulatory commissions that they, and not the industry, resolve slamming disputes. Previously, the Commission had delayed the effective date of the liability rules to permit the industry to reach consensus on a plan to have an independent third party administrator resolve slamming disputes and administer the liability rules. However, such a consensus was never reached. Over thirty-five state commissions came forward to express their willingness to take the lead in administering anti-slamming rules, and the Commission accepted their proposal. Additionally, today's action reaffirmed that, where the consumer has not paid the slammer, the consumer is absolved of the obligation to pay for service for up to thirty days after being slammed. However, for those cases where the consumer has paid the slamming carrier, the Commission modified the applicable liability rules. Under the new rules, a slammer is obligated to pay to the authorized carrier 150% of the charges it received from the consumer. The authorized carrier will, in turn, reimburse the consumer 50% of the charges the consumer paid to the slammer. Thus, the Commission increased penalties for slamming and increased the incentives for authorized carriers to go after slammers, while ensuring that consumers receive compensation. Court Stay Summary Today's order is a reconsideration of the anti-slamming rules that the Commission adopted in 1998. Those rules included the following: Strengthening the liability rules to take the profit out of slamming by absolving consumers of 30 days of slamming charges. Strengthening the procedures by which carriers must obtain customer verification of preferred carrier change requests. Broadening the scope of these verification procedures to apply to local as well as long distance carriers. Establishing rules governing preferred carrier freezes, which prohibit carriers from changing a consumer's preferred carrier without that consumer's express authorization to "lift the freeze." In May 1999, the U.S. Court of Appeals for the D.C. Circuit stayed the liability rules at the request of MCI WorldCom. The Commission believes that today's actions, particularly the decision to have the states resolve slamming disputes and the modification of the re-rating rules, should remove any concern that may have prompted the court to impose a stay, and will ensure that consumers are fully protected from slamming. Action by the Commission April 13, 2000, by First Order on Reconsideration (FCC No. 00-135). Chairman Kennard, Commissioners Ness, Powell and Tristani, with Commissioner Furchtgott-Roth approving in part and dissenting in part. CC Docket No. 94-129 -FCC- Common Carrier Bureau contact: Michele Walters at (202) 418-7400 News about the Federal Communications Commission can also be found on the Commission's web site www.fcc.gov.

Summary / Background

• Slamming is the practice of changing consumers' telecommunications carriers without their knowledge or permission.

• To deter slamming, the Federal Communications Commission (FCC) adopted new anti- slamming rules in December, 1998 by:
  1. Strengthening the liability rules to take the profit out of slamming by absolving consumers of 30 days of slamming charges.
  2. Strengthening the procedures by which carriers must obtain customer verification of preferred carrier change requests.
  3. Broadening the scope of these verification procedures to apply to local as well as long distance carriers.
  4. Establishing rules governing preferred carrier freezes, which prohibit carriers from changing a consumer's preferred carrier without that consumer's express authorization to "lift the freeze."

• The majority of the Commission's slamming rules took effect on April 27, 1999. The effective date of the liability rules were delayed for 90 days to enable the industry to implement a plan for an independent third party for dispute resolution and administration of the liability rules. However, the liability rules were stayed by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) on May 18, 1999 at the request of MCI WorldCom, Inc.

• The liability rules were at the core of the FCC's efforts to eliminate slamming by giving consumers meaningful redress. Indeed, there was a decline in slamming complaints received by the FCC (and local telephone companies reported similar declines) during the period immediately prior to the May 1999 stay that may well have been attributable to carriers' recognition that the liability rules would make it costly to continue slamming. For example:
  1. In April 1999, the FCC received 1,355 slamming complaints, compared to only 840 complaints in May 1999.
  2. SBC's records showed that in April 1999, it received 23,484 slamming complaints, compared to only 15,271 complaints in May 1999.
  3. Bell Atlantic's records revealed that in March 1999, it received 35,556 slamming complaints, but that these complaint numbers dropped to 19,263 in April 1999 and to 15,951 in May 1999.

Court Stay

• March 30, 1999 - MCI WorldCom, AT&T Corporation, the Competitive Telecommunications Association, Sprint Corporation, the Telecommunications Resellers Association, Excel Telecommunications, Frontier Corporation, and Qwest Communications Corporation filed a Joint Petition for Waiver of the Commission's liability rules.

• May 10, 1999 - MCI WorldCom filed a Motion for Stay Pending Judicial Review in the D.C. Circuit asking the court to stay the liability rules while the court decides whether they are arbitrary, capricious or otherwise unlawful.

• May 18, 1999 - The D.C. Circuit issued a stay of the Commission's liability rules pending further order of the court. This court order did not affect the other slamming rules adopted, which went into effect in April 1999. The court ordered that the case be held in abeyance and directed the parties to file motions to govern further proceedings within thirty days of the Commission's disposition of the pending petitions for reconsideration of the slamming Order. Therefore, the effective date of the liability rules was indefinitely delayed.

Slamming Complaints

• Slamming has been the single largest source of complaints to the Commission over the last several years.

• Written complaints processed by the FCC:

  1996 - 12,795
  1997 - 20,475
  1998 - 20,124
  1999 - 21,868
  2000 - 3,000 complaints in the first quarter of the year

Enforcement Actions

• Since April 1994, the Commission has:
  1. Imposed final forfeitures against eight companies for $10,321,500.
  2. Entered into consent decrees with 12 carriers with combined payments of $2,710,000.
  3. Proposed $7,640,000 in Notices of Apparent Liability (NALs) against five companies.